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TMI Blog1987 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... sent referred to above. 16th October, 1971 : The Circle Officer signed the Record of Rights after taking the testimony of the farmer Shri Becharbhai H. Patel and the name of the tiller was deleted form the Record of Rights. 24th January, 1972 : Shri Sanmukhlal B. Shah (informed the Karta of the HUF) that the tiller of the land had been paid the amount agreed to be paid for vacating the possession and the possession was received. 27th June, 1972 : The Baroda Municipal Corporation issued the Raja Chithi approving the lay out plans for plotting the land. 11th August, 1972 : Gujarat Urban Lands (Prohibition of Alienation) Act, 1972 was passed with effect from 1-7-1972 being the date of the preceding Ordinance. 7th January, 1974 : The land was declared to be for Non-Agricultural (N. A.) use by the Collector. 15th February, 1974 : A registered Banakhat for the sale of land was executed (the first one not having been registered) with the same Shri Sanmukhlal B. Shah. 3rd May, 1975 : Second Raja Chithi of the Municipal Corporation No. L. 10/75-76 was received. 12th August, 1975 : Gujarat Urban Lands (Prohibition of Alienation) Act, 1972 was repealed. 19th August, 1975 : T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged partition shows that the property in fact was sold by the HUF and the members of the HUF and since the property was not in a condition to be divided as done in the partition deed at the time of alleged partition I hold that there was no partition of the property by the members of the HUF. Hence the assessee's application for partition of the property is rejected". 4. In appeal before the Commissioner (Appeals), it was argued by the assessee that the ITO had wrongly rejected its application for recording partial partition u/s 171 of the Act. In this connection, it was further submitted that (i) the property in question was actually partitioned amongst the members of the assessee-HUF, (ii) the karta of the assessee-HUF had negotiated for the sale of the land in question and the same was sold subsequently after the partition amongst the members of the assessee-HUF, (iii) the sale proceeds were received by the individual members of the assessee-HUF and therefore the ITO was not justified in taxing the capital gains in the hands of the assessee-HUF, (iv) as there was physical division of the property in question amongst the members of the assessee-HUF, the actual partition had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and allocation of the share of land to each member of the assessee-HUF in the land in question, (iii) the second banakhat dated 15-12-1974 (pages 37 to 43 of the paper book) which executed by all the members of the assessee-HUF contains the fact that the land in question was divided in which the sale proceeds are to be received by the members of the assessee-HUF, (iv) the sale documents (pages 27 to 30 of the paper book) were executed between the purchaser and the members of the assessee-HUF separately in respect of their shares in the property in question. The recital of these documents contained the fact of division/partition of the land in question amongst the members of the assessee-HUF, (v) entry No. 8478 in the record of Baroda Kasba Talati (page 52 of the paper book), records the fact about the division/partition of the land in question amongst the members of the assessee-HUF, (vi) chart (page 64 of the paper book) showing the amount received by the members of the assessee-HUF on sale of their respective portion of land received on partition of the land in question. Relying on the decision of the Hon'ble Madras High Court in the case of Aruna of Estates v. State of Madr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the decision of the Hon'ble Supreme Court in the case of Raj Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33. 7. The learned counsel for the assessee, in his reply, invited the attention of the Tribunal to sub-clause (ii) of clause (a) of Explanation to section 171 of the Act, and submitted that the IT authorities ought to have accepted the assessee's claim for partial partition of the land in question. Inviting our attention to the decision of the Hon'ble Supreme Court in McDowell Co. Ltd.'s case, the learned counsel for the assessee submitted that according to the majority decision "tax planning may be legimate provided it is within the framework of law". Since in the instant case, a member of a Hindu family has birth right of claiming a partition under the Hindu Law, the same cannot be treated as illegitimate in the tax matter as was done by the IT authorities. 8. We have carefully considered the rival submissions of the parties as well as the material to which our attention was invited by the parties and we find considerable force in the submissions made on behalf of the assessee. On the proper appreciation of the evidence already brought on record, it is not pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance; the first was executed in favour of Udyog Kamdar Society for 6,703 sq. yards for Rs. 1,07,248 on September 12, 1966; the second deed of conveyance was in respect of the part of land admeasuring 6,884 sq. yards in favour of Umiyadevi Co-operative Housing Society for Rs. 96,326 by a deed of conveyance of April 27,1967, and the third was in respect of the remaining [portion of land admeasuring 5,523 sq. yards for Rs. 77,322 in favour of Prakash Co-operative Housing Society under a deed of conveyance of September 16, 1967. Meanwhile, it appears that there was registered partition deed between the members of the HUF of Govindbhai executed on September 12, 1966, agreeing to divide the said land and for that matter the sale proceeds of the said land which Govindbhai had agreed to sell to Shri P. V. Patel, which he sold to the aforesaid three societies. Each one of the members was given a 1/6th shares in property which was agreed by the divided. It appears that in the course of assessments for the assessment years 1967-68 and 1968-69, a question arose relating to the aforesaid partial partition of land when Govindbhai made an application to the ITO under section 171 of IT Act, 1961, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book. Further, in the deed of partition description and allocation of the shares of the land of each of the members of the assessee-HUF, in the land in question, have been given to show that the land in question has been demarcated amongst the members of the assessee-HUF. The second banakhat dated 15-2-1974 which preceded the execution of the sale deed clearly records that the land in question was divided amongst the members of the assessee-HUF. Not only that it also contains the manner in which the sale proceed were to be received by the members of the HUF. It is also pertinent to note that the sale documents were not executed between the karta of the assessee-HUF and the purchasers but were executed between the purchasers and the members of the assessee-HUF separately in respect of their share in the property in question. These documents also contain recitals stating the fact of division /partition of the land in question amongst the members of the assessee HUF. This fact is also recorded in the Baroda Kasba Talati's record vide entry No. 8478 dated 23-2-1976. On the proper appreciation of these facts, we are of the view that the assessee's claim for recognising and recording the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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